Part 36 offers In SG v Hewitt27 the Court of Appeal grappled with the costs consequences of late acceptance of a defendant’s part 36 offer. The usual costs order under CPR 36.10(5) following late acceptance of an offer is that the late accepting party should pay the offeror’s costs from the expiry of the relevant period. If it would be unjust to make the usual order, then the court will make a different order.28 The issue was the circumstances which would make the usual order unjust. The question had previously been considered in Matthews v Metal Improvements Co Inc29 with harsh results for the claimant. The claimant in Matthews sued in respect of a brain injury and lacked capacity. He also had cancer unrelated to his claim. The prognosis was good. A part 36 offer was made and not accepted. The prognosis for the cancer then worsened. Life expectancy was reduced and the part 36 offer became attractive. The claimant accepted it out of time but had to pay the costs from the date on which the time for accepting elapsed. The Court of Appeal held that the worsening of the cancer was an ordinary contingency of litigation and not something making it unjust to order him to pay the costs. The Court of Appeal in SG, however, took a more merciful view. The claimant was a child who had suffered a brain injury and at the time the part 36 offer was made the medical experts were unsure of the long term effects. A prognosis could not be given until the claimant matured. Ultimately the claimant did well and the part 36 offer looked attractive. It was accepted some two years out of time. The Court of Appeal referred to the four factors at CPR 36.14(4) namely the terms of the offer, the stage in proceedings when it was made, the information available to the parties when the offer was made and the conduct of the parties with regard to sharing information on which the offer could be evaluated. Other relevant factors might include whether the recipient of the offer was a child or patient, the reasonableness of the recipient’s approach to the offer and whether the difficulties in evaluating the offer were merely part and parcel of the ordinary contingencies of litigation. In the instant case, the Court of Appeal found the only reasonable course the claimant’s advisors could have adopted was a wait and see approach whilst the claimant developed. The claimant’s advisers moved quickly when the prognosis did become clear. The defendant was ordered to pay all the claimant’s costs. Each case turns on its facts, as the Court of Appeal stressed, but this decision will be a comfort to claimants made uncomfortable by Matthews.
There have further been two recent cases in which the courts have interpreted the meaning of CPR 36.13(2). This is the rule which provides that the fact that a part 36 offer has been made ‘must not be communicated to the trial judge or to the judge (if any) allocated in advance to conduct the trial until the case has been decided....’. Mr Justice Eder in the case of Ted Baker plc v Axa Insurance30 (who echoed Henderson J’s comments in the case of AB v CD31 that there was a real problem with the drafting of this rule that needed to be looked at urgently by the rules committee), found that where the hearing of a preliminary issue had taken place (which had not disposed of all aspects of liability and none of quantum) the prohibition on communicating part 36 offers to the judge applied. He went on to hold that although he did not know whether a part 36 offer had been made, he could not exclude the possibility that one had and that such an offer might at the very least, affect the court’s discretion in relation to the costs of the preliminary issue. This was a matter that the court was bound to have regard to when considering what if any order to make about costs pursuant to CPR 44.3, and in those circumstances it was appropriate not to make any immediate order for costs. Accordingly the costs of the preliminary issue were reserved. In Beasley v Alexander32 Sir Raymond Jack held that the words ‘until the case has been decided’ means until the action or the proceedings have been decided. Accordingly, following a liability trial, part 36 offers made only in respect of contributory negligence could not be communicated to the court and so the costs of the liability part of the trial had to be reserved.
Restoring defendant company to the register In Peaktone v Joddrell,33 the Court of Appeal held that an order restoring a company to the register pursuant to section 1029 of the Companies Act 2006 will retrospectively validate an action commenced against a company during the period of its dissolution. Mr Joddrell commenced proceedings against his former employer for noise induced hearing loss on 24 August 2009. By that time Peaktone had been struck off the Register of Companies and dissolved pursuant to section 652 of the Companies Act 1985. The claim form and particulars of claim were sent on 23 December 2009 to Peaktone’s last registered office and thus Mr Joddrell learnt of the dissolution.
Accordingly in April 2010 he applied to the Companies Court for an order pursuant to section 1029 Companies Act 2006 to restore Peaktone to the Register for the purposes of commencing proceedings. This order was made in June 2010 and was never challenged. Peaktone contended that the proceedings should be struck out on the basis that the proceedings when issued were a nullity because the company no longer existed and that the order restoring Peaktone when made did not validate the proceedings retrospectively. The Court of Appeal referred to the broad wording of s1032(1): “the general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.” It held that the effect of an order is as the section suggests: it is thereafter deemed to have continued in existence not to have come back into existence on the date of the order and so what has happened in relation to the company between dissolution and restoration will be effective.